Russia Inflation

Russia: Inflation falls in December

December 31, 2015

Preliminary data released on 31 December by the Federal Statistics Office (Rosstat) showed that consumer prices rose 0.8% over the previous month, which followed a similar increase in November. The reading fell short of the 0.9% rise the markets had expected. More complete data will be released on 13 January.

Inflation fell sharply from 15.0% in November to 12.9% in December. The reading marked a fourth consecutive decline from the peak registered in August (15.8%) and the lowest rate in 2015, despite the weakening of the Russian ruble and the recent embargo on Turkish products. Inflation slowed significantly in December 2015 due a base effect, as the annual variation in consumer prices rose notably in December 2014. Moreover, due to the base effect, inflation is expected to continue easing in the coming months, but upward pressures to consumer prices are likely to come from the persistent weakness in the Russian ruble and Russia’s ban on imports from Turkey and Ukraine. Inflation closed 2015 above the Central Bank’s inflation target of 4.5%.

In its December monetary policy, the Central Bank indicated that it expects inflation to end 2016 at around 6.0% and that it will be on track to reach the 4.0% inflation target in 2017. The Consensus view of a panel of analysts surveyed by FocusEconomics is not in line with the Central Bank’s assessment. Panelists see inflation ending 2016 at 7.4%, which is unchanged from last month’s forecast. For 2017, participants expect inflation to ease to 6.0%.

Author:Ricardo Aceves, Senior Economist

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